- By Pierre-Alexandre
March 8th, 2020
Here’s a look at all the key developments in Ethereum 2.0, the market expectations, and what are the factors that will drive the ETH price in 2020.
Ethereum, the world’s second-largest cryptocurrency by market cap continues to hold its dominant position in the altcoin market. Ethereum’s 2019 performance remained modest while ending the year on a flat note.
However, Ethereum’s start to 2020 has been pretty solid!
So far, since the beginning of 2020, the ETH price has shot 80% northwards. By the mid of February 2020, the ETH price gains crossed 100% with its price hitting $300 levels. This was the first time that the ETH price has touched $300 in the last eight months since July 2019.
However, over the last fifteen days and with the market sell-off related to the Coronavirus crisis, Ethereum has corrected and currently entered the consolidation zone around $220- 240. Ethereum alone contributes 10% of the overall cryptocurrency market cap.
The Omenics Sentscore chart shows that the overall market sentiment around the Ethereum price has been in healthy state in 2020. So far, the chart has oscillated between the “neutral” (4-6) and the “positive” (6-7.5) regions. But the Ethereum market sentiment seems to be dropping off-lately with the price correction.
Moreover, the News sentiment chart for Ethereum is quite similar to the Sentscore chart. It largely oscillates between the “neutral” and the “positive” regions for most of the time:
The social sentiment around Ethereum remains volatile but range-bound in the “neutral” zone between 4-6:
With the Ethereum price rally in February 2020, the buzz chart for Ethereum has surged from “less content than usual” zone to “average amount of content” zone. However, with the ETH price correction, it has dropped back again below 3.5 into the “less content than usual” zone:
With Ethereum’s price rally, the Ethereum technical analysis chart has surged from the “bearish” zone below 4 to the “very bullish” zone above 7.5. Upon the recent correction, the technicals have dropped to the “neutral” zone between 4-6.
The Ethereum network is all set to undergo major developments in early 2020. All the technical developments and upgrades will be introduced as part of Ethereum 2.0.
Vitalik Buterin and Joe Lubin at ETHLondonUK - What will 2020 mean for Ethereum?
Decentralized Finance (DeFi) Applications on the Rise
While the number 1 altcoin has struggled over the last quarter, the number of decentralized finance (DeFi) applications on the Ethereum network has been on a rise. .
The total value in DeFi apps has surged 170% over the last year and is currently over $550 million. This clearly shows that despite the Ethereum price performance remaining modest, its fundamental continue to grow stronger with time.
Major Upcoming Developments to the Ethereum Blockchain Network
Over the last year and so, the Ethereum network has been facing major challenges of scalability and network congestion with high DApp activity.
Ethereum developers along co-founder Vitalik Buterin have been working actively to solve these issues. Together they have planned some major upgrades and changes to the Ethereum blockchain. Let’s take a look at some of the major developments of Ethereum 2.
- Proof-of-Stake (PoS): This will be a major transition in the consensus mechanism of the Ethereum blockchain platform. The existing Proof-of-Work mechanism of the Ethereum blockchain, requires a lot of electricity and high-end hardware while concentrating the mining power into the hands of a few miners.
Moving to a much simpler Proof-of-Stake (PoS) means giving people control based on their staking capacity. The Ethereum 2.0 also plans to offer a PoS chain.
The PoS chain will run in parallel to the existing PoW chain used by the network. Initially, the PoS chain will not support smart contracts to maintain network simplicity and also reduce the complexity of switching between PoW and PoS.
- Sharding: This is specialized protocol that aims to improve the network efficiency by tweaking the way the transactions are verified. Herein the Ethereum network is divided across multiple sections called ‘Shards’ that allows for simultaneous processing of several transactions at once.
In the existing Ethereum network structure, each node has to verify all transactions taking place in the network. This increases the clutter considering there are several thousand nodes confirming several thousand transactions all the time.
Sharding solves this issue by separating data and transactional processing functions into different nodes within the network. This removes the necessity for all nodes to store all the data and process all the transactions.
- Plasma: The Plasma protocol is complementary to sharing and aims to remove unnecessary data from the blockchain in order to free-up some space. Currently, if someone creates a new smart contract, it automatically gets submitted to the Ethereum mainnet.
Even if the contract sits idle for a long time, it will still be sent to the blockchain. This creates a lot of clutter and congestion which ultimately slows down the network. The Plasma protocol will add an additional layer atop the main blockchain network that will be used for completing all the incomplete contracts.
Ethereum co-founder and now the CEO of ConsenSys, Joseph Lubin, said: “Plasma is this class of technologies that enable you to have less decentralized platforms sitting at layer two in the Ethereum ecosystem. They can benefit from the full trust in some cases — sometimes they benefit from partial trust — but if they're linked in really rigorously, they can benefit from the full trust of the base trust layer, and you can get the best of both worlds.”
- Finally, Ethereum Serenity shall be the last stage of development for the Ethereum 2.0 expected to launch by the end of this year in 2020. The Ethereum 2.0 is also commonly referred to as Serenity as it will finally have Proof-of-Stake integrated along with a completely new Ethereum Virtual Machine and several other developments.
Latest Developments Shared by Vitalik Buterin on Ethereum 2.0
There has been a lot of things moving to-and-fro concerning the developments with Ethereum 2.0. However, developers and co-founder Vitalik Buterin have been constantly communicating with the community and keeping things transparent.
This has led several Ethereum enthusiasts staying positive and believing in the development team’s ability in delivering key solutions to Ethereum 2.0. But before we proceed to discussing the ETH 2.0 developments, let us look at the improvements introduced by the latest Istanbul hardfork.
- Istanbul is the last stage in the Ethereum 1.0 before moving to Ethereum 2.0. The Istanbul hardfork broth some key developments to some of the core Ethereum Improvement Proposals (EIPs) closely related to ZCash (ZEC).
The EIP152 upgrade involved improving the interoperability with the actual ZCash blockchain. On the other hand, the EIP-1108 brought some optimisations for the cryptography routines through projects like Aztec and ZEther.
The Aztec Protocol uses the SNARK zero-knowledge technology to introduce confidential transactions on the Ethereum blockchain network. Note that this is the same technology used by ZCash on its platform. The Aztec protocol successfully conducted its trusted setup ceremony last month on January 9. Thus, it is most likely to launch its cryptography engine this month.
On the other hand, Matter Labs also plans to leverage SNARKS for scalability. It uses its native Zk Sync technology to offload a majority of the transaction off-chain reducing the burden on the main network. Furthermore, it will use a zero-knowledge proof to ensure its correct execution. Matter Labs also launched its smart contract framework last month but it’s not a fully scalable technology.
- In his blog post in December 2019, Ethereum co-founder Vitalik Buterin talked about ways to speed up the launch for Ethereum 2.0. In his blog post, Buterin speaks about “stateless clients”. This is basically a method that aims at changing the way contract code, account balances, and other information is stored on the network.
Stateless clients aims making Ethereum 2.0 blockchain lighter by mathematically proving the data existence and validity without the need to store all the information. In a word with CoinDesk, Buterin said: “The clients basically do the same verification that it would normally do except it doesn't store the state. It just kind of grabs the state in real time and verifies it using [the client’s] Merkle proof.”
- Ethereum’s lead developers are confident that they would launch ETH 2.0 as early as the summer of 2020. This launch would include initial components like Phase 0 and the Beacon Chain, also called the building blocks of the new PoS blockchain.
During an AMA Reddit discussion earlier this month, Ethereum researchers Danny Ryan and Justin Drake briefed the audience about their plans. Drake said that he is 95% confident that the launch will happen in 2020. Other developer Danny Ryan said: “Phase 0 will certainly launch in 2020. Audits are out and testnets are getting stronger every week,” Ryan said in the discussion thread. “I don't see a reality in which Phase 0 does not launch in 2020.”
- Last month in January 2020, the developers launched the client testnet for Ethereum 2.0 by seeing nearly 100% participation from over 22,000 validators. In the coming months, Ethereum token holders who are willing to participate in ETH 2.0 launch will get will get one major feature update called staking contracts.
Ryan said that contracts for ETH staking are currently under audit and the community can expect an announcement by this spring at a major Ethereum event. The developer team is confident that going further, the number of validators can go into millions.
Major Ethereum Projects In the Pipeline Getting Massive Funding
While the Ethereum network is undergoing some transitions and challenges, it continues to attract new project on the platform. There are seven new open-source projects which have received a massive $175,000 from ConsenSys.
ConsenSys is a software technology company that works on big projects around blockchain and its applications that function on the Ethereum network.
As per CoinDesk, these projects include “a forward-looking ethereum software client called Lighthouse, an oracle network for off-chain data called Tellor and a mobile decentralized app-builder called Alice”.
After launching in February 2019 last year, the ConsenSys grants program has received 150 project applications of which 15 have already been granted a funding of $330,000.
Reportedly, a merger between Wall Street giant JP Morgan and ConsenSys is on the cards and this could possibly materialize within the next six months. As per the Reuters report, the merger will see JP Morgan’s blockchain unit Quorum joining hands with ConsenSys.
Quorum is JP Morgan’s native blockchain platform built on the Ethereum blockchain platform. JP Morgan uses its Quorum platform for running the Interbank Information Network (IIN). The IIN is a payments network with over 300 participating banks.
Besides, JP Morgan has already said that it shall be using the Quorum platform for its native cryptocurrency JPM Coin, to instantly process and settle global payments for its institutional clients. Since ConsenSys has been working on developing blockchain-based entrepreneurial solutions using the Ethereum platform, this merger could potentially unlock new opportunities in the market.
Vitalik Buterin Promises Better Privacy and Scalability in 2020
Last year, Ethereum co-founder Vitalik Buterin described for major phases for Ethereum 2.0:
- Phase 0, get proof of stake running.
- Phase 1, sharding, so scalability, but starting with data.
- Phase 2, add stake and execution, which basically just means computation and smart contracts.
- Phase 3 is basically other stuff that we want to add down the line.
Besides, Buterin stressed that new upgrades to Ethereum will put major emphasis on privacy protection. As said earlier, Buterin plans to use zero-knowledge proofs for proving information through computations instead of publicly revealing other specific details. This would enable the execution of private transactions and contracts.
Buterin said that privacy is of utmost importance when you’re developing enterprise-grade solutions.
He added: “If you’re an enterprise, you want privacy. When one of these groups build something for its own use, then a lot of the time that code can be taken and it can be re-purposed in other communities. Here we have enterprise-focused groups. One is Nightfall by Ernst and Young. The other is Zeth by Clearmatics which is a company building permissions settlements based on Ethereum for some major banking institutions”.
Talking about scalability, Buterin spoke about “optimistic rollup”, a scaling for smart contracts and decentralized applications (DApps) for the Ethereum network. Buterin said that Optimistic roll-up can easily handle 4000 transactions per second in the best case.
Explaining further he said: “Optimistic rollup is the scalability technique that says, ‘We’re going to put the computation off chain. We’re going to put data on chain. And data is generally cheaper than computation and we’re going to try really hard to compress the data’. Honestly, even if Ethereum 2.0 was delayed by another two or three years, this thing could easily carry us all the way until then.”
Ethereum Price Predictions for 2020
Currently, the future of ETH price completely depends of the future success of Ethereum 2.0 and other developments which the developers will bring.
Different analysts have given predictions for the Ethereum price in 2020. However, if we consider them all Ethereum ETH price could be likely in the range of $1000-$2000 by the end of 2020. .
As we know that the use of Decentralized Finance (DeFi) applications is constantly on the rise and Ethereum is serving as the hot platform for the DeFi ecosystem. This can possibly catapult the ETH price to new highs.
Here is what some of the popular analysts think about the ETH price going further:
I think $ETH will double by the end of the year.— The Crypto Dog📈 (@TheCryptoDog) February 25, 2020
Crazy that $ETH is going to hit $5,000 this year— The Crypto Dog📈 (@TheCryptoDog) February 18, 2020
Crazy that $ETH is going to be over $2,000 next cycle— moon (@MoonOverlord) February 18, 2020
Crazy that $ETH is going to hit $8,000 in the next few years— Josh Rager 📈 (@Josh_Rager) February 18, 2020
wow eth almost cured coronavirus pic.twitter.com/6DU6kmxGgU— loomer (CKB maximalist) (@loomdart) March 7, 2020
$ETH/BTC— Cred (@CryptoCred) February 12, 2020
Arrived at key HTF structure after breaking out of the smaller range.
Technically analogous to Bitcoin's $6000 floor: reentering the range would likely lead to aggressive continuation.
I would interpret a reclaim as a proxy indicator for further ALT/BTC strength. pic.twitter.com/OULDTJG52P
[NEW POST] There is a new meme gaining popularity in the crypto community that "ETH is money."— Pomp 🌪 (@APompliano) March 2, 2020
This is inaccurate. ETH is no different than a fiat currency.https://t.co/7uhWjLLSVW
$ETH to 250 or the market is wrong.— Hsaka (@HsakaTrades) March 6, 2020